Crumbs closes in bitter end for biggest U.S. cupcake chain

NEW YORK (Reuters) - Cupcakes still lined the counter of an empty and unlit Crumbs Bake Shop on 42nd Street in New York City on Tuesday afternoon, the day after the largest U.S. cupcake retailer announced it was closing.

Crumbs, which specializes in oversized cupcakes and went public in 2011, shuttered its nearly 50 locations in 10 states and the District of Columbia.

Gina Mackey and Raquel Baquero of Queens stopped by the store after they heard the news that it would be closing.

“I don’t do too much cupcake stuff because I don’t find them to be very moist. But this was a moist cupcake and I did enjoy it, so it’s a shame it went out of business,” said Mackey. “Had I known it was going to go out of business, I would have come and gotten my last Crumbs cupcake.”

“And I would have gotten my first,” said Baquero, her daughter.

“When my friend posted the story they were closing, I was like, ‘Well, I just blew it,’” Baquero said. “I just walked by to confirm that they were really closed.”

The news follows less than two weeks after the NASDAQ announced it would stop trading Crumbs, which hoped that the frosted cake made famous by Magnolia Bakery in New York City and “Sex and the City” could fuel growth at a nationwide chain.

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The smaller Magnolia, for its part, brushed its competitor’s closure off, pointing to its diverse pastry offerings compared with Crumbs’ signature dessert.

“It is early, of course, but we have already seen an increase in customer inquiries on the heels of the announcement,” a representative for the smaller New York bakery said in an email.

Crumbs had seen a steep decline in profitability since its debut on the market: In its quarterly report from March, the company posted an accumulated deficit of $28.8 million.

While the Crumbs bankruptcy was an unusual setback for the humble dessert which has experienced something of a boom over the last decade, David Sax, author of The Tastemakers: Why We’re Crazy for Cupcakes but Fed Up With Fondue, insisted that the muffin-sized cakes have a bright future.

“This is much more a story about one company’s mismanagement of its product line than it is about the hatred or falling off of one particular American pastry,” he said. “When the housing market crashed in 2007 or 2008, it wasn’t like people stopped investing in real estate,” he added. “The death of Crumbs doesn’t mean the end of every other cupcake bakery.”

Outside the Crumbs on 42nd Street, near Times Square, disappointment was palpable. A pregnancy craving brought Neicy Robinson of the Bronx to another Crumbs location before she walked to the Bryant Park store and realized they had all closed.

“I don’t know what’s going on. I’m so lost,” she said. “I just want some cupcakes!”

Reporting by Mimi Dwyer; Editing by Lisa Shumaker